Chevron's Big Foot Platform Pulled Out of Gulf of Mexico
Zacks Equity Research 5 hours ago
U.S. energy giant Chevron Corp.’s CVX troubled Big Foot platform has been dragged out of the Gulf of Mexico (GoM) back to South Texas even as the company continues to probe the equipment failure associated with latching the platform to the Gulf seafloor.
In late May, the integrated major announced its plan to move its Big Foot tension-leg platform (TLP) to the sheltered waters from the deepwater U.S. GoM. The decision was taken after the company spotted damages to subsea installation tendons. Out of the 16 mile-long tendons − that were installed for securing the floating platforms − 6 sank and were lost. A few days later, additional 3 steel tubes were damaged. Hence, a total of 9 tendons were lost.
The incident forced one of the largest U.S. oil companies by market along with the likes of Exxon Mobil Corp. XOM, ConocoPhillips COP and Occidental Petroleum Corp. OXY to indefinitely postpone the planned start of oil production from the Big Foot platform, which had already been delayed for months due to the region’s strong loop current.
Among the projects that are expected to contribute to Chevron's projected 3.1 million barrels of oil-equivalent per day production in 2017 - 20% higher than 2014 output level – the multibillion dollar Big Foot development is crucial. Hence, with the loss of 9 tendons, the company believes that the anticipated net increase in 2017 production will be lowered by less than 25,000 barrels a day.
As it is, the commodity price rout has brutalized Chevron’s upstream business segment revenue and earnings. What’s more, the outlook remains grim, too, with fundamentals suggesting that the odds are firmly stacked against a sustained crude rally. That’s the reason analysts are predicting a huge drop in Chevron’s EPS this year.